02a0211p.06

7KH +RQRUDEOH &KDUOHV 5 6LPSVRQ ,,, 8QLWHG 6WDWHV 'LVWULFW -XGJH
IRU WKH :HVWHUQ 'LVWULFW RI .HQWXFN\ VLWWLQJ E\ GHVLJQDWLRQ

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS 3 WK &LU
)LOH 1DPH DS
81,7('67$7(6&28572)$33($/6
)257+(6,;7+&,5&8,7
BBBBBBBBBBBBBBBBB
81,7(' 67$7(6 2) $0(5,&$
3ODLQWLII$SSHOOHH
Y
-$0(6 +(15< &/$5.
'HIHQGDQW$SSHOODQW
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH0LGGOH'LVWULFWRI7HQQHVVHHDW1DVKYLOOH
1R²-RKQ71L[RQ'LVWULFW-XGJH
$UJXHG$SULO
'HFLGHGDQG)LOHG-XQH
%HIRUH'$8*+75(<DQG0225(&LUFXLW-XGJHV
6,03621'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 6XPWHU / &DPS )('(5$/ 38%/,&
'()(1'(5¶62)),&(1DVKYLOOH7HQQHVVHHIRU$SSHOODQW
:LOOLDP &RKHQ $66,67$17 81,7(' 67$7(6

-- 1 of 6 --

8QLWHG6WDWHVY&ODUN 1R
$77251(< 1DVKYLOOH 7HQQHVVHH IRU $SSHOOHH
21 %5,() 6XPWHU / &DPS )('(5$/ 38%/,&
'()(1'(5¶62)),&(1DVKYLOOH7HQQHVVHHIRU$SSHOODQW
:LOOLDP &RKHQ $66,67$17 81,7(' 67$7(6
$77251(<1DVKYLOOH7HQQHVVHHIRU$SSHOOHH
6,03621 ' - GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ
ZKLFK '$8*+75(< - MRLQHG 0225( - SS
GHOLYHUHGDVHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJ
LQSDUW
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
6,03621 'LVWULFW -XGJH 'HIHQGDQW$SSHOODQW -DPHV
+HQU\&ODUN ³&ODUN´ DSSHDOVKLVFRQYLFWLRQDQGVHQWHQFHIRU
EDQNUREEHU\RQWKHJURXQGVWKDW WKHUHZDVLQVXIILFLHQW
HYLGHQFHWRVXSSRUWKLVFRQYLFWLRQEHFDXVHKHZDVLQVDQHDW
WKHWLPHRIWKHFRPPLVVLRQRIWKHRIIHQVHDQG WKHGLVWULFW
FRXUWHUUHGLQDSSO\LQJDWZROHYHOHQKDQFHPHQWXQGHU86
6 HQWHQFLQJ *XLGHOLQHV 0 DQXDO ³8 6 6 * ´
†% E ) IRUPDNLQJDWKUHDWRIGHDWKGXULQJ
WKH FRPPLVVLRQ RI WKH FULPH )LQGLQJ QR PHULW WR WKHVH
FRQWHQWLRQV ZH $)),50 ERWK WKH FRQYLFWLRQ DQG WKH
VHQWHQFH
,)$&76
2Q-XQHDUREEHUHQWHUHGWKHPDLQRIILFHRIWKH
)LUVW$PHULFDQ%DQNLQ1DVKYLOOH7HQQHVVHHDQGDSSURDFKHG
DWHOOHUZLQGRZ+HKDQGHGWKHWHOOHUDQRWHZKLFKUHDG³,
KDYH DJXQ'RZKDW\RXDUHWROGDQG\RXZRQW>VLF@JHW
KXUW´+HWROGKHUWRJLYHKLP³KXQGUHGVDQGILIWLHV´ZKLFK
VKHGLG1RZHDSRQZDVGLVSOD\HGGXULQJWKHUREEHU\7KH
UREEHUWRRNWKHPRQH\DQGFDOPO\OHIWWKHEDQN
7KH WHOOHU LGHQWLILHG -DPHV +HQU\ &ODUN DV WKH UREEHU
&ODUNDJUHHGWRVSHDNZLWKODZHQIRUFHPHQWRIILFLDOVDWWKH
1DVKYLOOH)%,RIILFH7KHUHKHZDVLQWHUYLHZHGE\SROLFH
1R 8QLWHG6WDWHVY&ODUN
SHUVRQZKRLVDYLFWLPRIWKHRIIHQVHVLJQLILFDQWO\JUHDWHU
IHDUWKDQWKDWQHFHVVDU\WRFRQVWLWXWHDQHOHPHQWRIWKHRIIHQVH
RIUREEHU\´WKHFXUUHQWYHUVLRQFDOOVIRU³DIHDURIGHDWK´
:HVKRXOGJLYHHIIHFWWRWKLVFKDQJH,VXEPLWWKDWDIHDURI
GHDWK LV TXDOLWDWLYHO\ JUHDWHU WKDQ WKH IHDU WKDW DSSOLFDWLRQ
QRWHSUHYLRXVO\UHIHUHQFHG,QVKRUW,EHOLHYHWKDWGLVWULFW
FRXUWV VKRXOG QRW DSSO\ † % E ) XQOHVV ³WKH
RIIHQGHU V HQJDJHG LQ FRQGXFW WKDW ZRXOG LQVWLOO LQ D
UHDVRQDEOHSHUVRQZKRLVDYLFWLPRIWKHRIIHQVHDIHDURI
GHDWK´866*†%FRPPHQWDU\DSSOLFQRWH
,QWKLVFDVHWKHGHPDQGQRWHUHDGDVIROORZV³,KDYHD
JXQ'RZKDW\RXDUHWROGDQG\RXZRQ>¶@WJHWKXUW´7KLV
WKUHDW PD\ VXJJHVW DQ LQWHQW WR KDUP EXW LW LQ QR ZD\
LQGLFDWHVDQLQWHQWWRNLOORUWRFDXVHWKHYLFWLP¶VGHDWK,GR
QRW VHH KRZ WKLV QRWH FRXOG LQVWLOO D IHDU RI GHDWK LQ D
UHDVRQDEOHSHUVRQDQGWKHUHIRUHUHVSHFWIXOO\GLVVHQWIURPWKH
PDMRULW\RSLQLRQDVWRWKHVHQWHQFLQJLVVXH

-- 2 of 6 --

8QLWHG6WDWHVY&ODUN 1R
SHUVRQ ZKR LV D YLFWLP RI WKH RIIHQVH VLJQLILFDQWO\
JUHDWHUIHDUWKDQWKDWQHFHVVDU\WRFRQVWLWXWHDQHOHPHQW
RIWKHRIIHQVHRIUREEHU\
866* † % FRPPHQWDU\ DSSOLF QRWH DPHQGHG
7KLVQRWHFXUUHQWO\UHDGV
³$WKUHDWRIGHDWK´DVXVHGLQVXEVHFWLRQ E ) PD\
EH LQ WKH IRUP RI DQ RUDO RU ZULWWHQ VWDWHPHQW DFW
JHVWXUH RU FRPELQDWLRQ WKHUHRI $FFRUGLQJO\ WKH
GHIHQGDQWGRHVQRWKDYHWRVWDWHH[SUHVVO\KLVLQWHQWWR
NLOOWKHYLFWLPLQRUGHUIRUWKHHQKDQFHPHQWWRDSSO\)RU
H[DPSOHDQRUDORUZULWWHQGHPDQGXVLQJZRUGVVXFKDV
³*LYHPHWKHPRQH\RU,ZLOONLOO\RX´³*LYHPHWKH
PRQH\RU,ZLOOSXOOWKHSLQRQWKHJUHQDGH,KDYHLQP\
SRFNHW´³*LYHPHWKHPRQH\RU,ZLOOVKRRW\RX´³*LYH
PH\RXUPRQH\RUHOVH ZKHUHWKHGHIHQGDQWGUDZVKLV
KDQGDFURVVKLVWKURDWLQDVODVKLQJPRWLRQ ´RU³*LYH
PHWKHPRQH\RU\RXDUHGHDG´ZRXOGFRQVWLWXWHDWKUHDW
RIGHDWK7KHFRXUWVKRXOGFRQVLGHUWKDWWKHLQWHQWRIWKLV
SURYLVLRQ LV WR SURYLGH DQ LQFUHDVHG RIIHQVH OHYHO IRU
FDVHVLQZKLFKWKHRIIHQGHU V HQJDJHGLQFRQGXFWWKDW
ZRXOGLQVWLOOLQDUHDVRQDEOHSHUVRQZKRLVDYLFWLPRI
WKHRIIHQVHDIHDURIGHDWK
866*†%FRPPHQWDU\DSSOLFQRWH,TXRWHERWK
YHUVLRQVLQIXOOWRKLJKOLJKWZKDWKDVFKDQJHGLQDSSOLFDWLRQ
QRWHVLQFHZHGHFLGHG$OH[DQGHUDQGZKDWKDVQRW7KH
ILYHH[DPSOHVLQWKHQRWHZKLFKWKH6HQWHQFLQJ&RPPLVVLRQ
UHWDLQHGLQH[DFWO\WKHVDPHIRUPDOOLQGLFDWHDQLQWHQWWRNLOO
RUWRFDXVHWKHYLFWLP¶VGHDWK7KHWKLUGH[DPSOH²³*LYH
PHWKHPRQH\RU,ZLOOVKRRW\RX´²LVDSRVVLEOHH[FHSWLRQ
EXWHYHQLWVXJJHVWVWKHGHIHQGDQW¶VZLOOLQJQHVVWRXVHDJXQ
LQVXFKDZD\DVWRFDXVHWKHYLFWLP¶VGHDWK
:KLOHNHHSLQJWKHH[DPSOHVRID³WKUHDWRIGHDWK´WKHVDPH
WKH 6HQWHQFLQJ &RPPLVVLRQ HIIHFWLYHO\ KHLJKWHQHG ZKDW
FRXUWVVKRXOGUHTXLUHEHIRUHLQFUHDVLQJRIIHQVHOHYHOVXQGHU
† % E ) :KHUHDV WKH SUHDPHQGPHQW YHUVLRQ RI
DSSOLFDWLRQQRWHVWDWHGWKDWVHQWHQFHVVKRXOGEHHQKDQFHG
ZKHQWKHGHIHQGDQW¶VFRQGXFW³ZRXOGLQVWLOOLQDUHDVRQDEOH
1R 8QLWHG6WDWHVY&ODUN
RIILFHU5ROO&ODUNDGPLWWHGUREELQJWKHEDQNDQGVLJQHGD
FRQIHVVLRQ $IWHU REWDLQLQJ WKH FRQIHVVLRQ 5ROO OHIW WKH
LQWHUYLHZ DUHD 'XULQJ 5ROO¶V DEVHQFH &ODUN WROG DQRWKHU
SROLFHRIILFHU(YHUHWWWKDWYRLFHVWROGKLPWRUREWKHEDQN
(YHUHWWQRWHGWKDW&ODUNZDVFDOPFRRSHUDWLYHDQGWDONDWLYH
,QDFRXUWSURFHHGLQJRQHZHHNODWHURIILFHU(YHUHWWQRWHG
DPDUNHGGLIIHUHQFHLQ&ODUN¶VEHKDYLRU&ODUNVHHPHGHGJ\
DQG XQHDV\ +H GHVFULEHG KLV GHPHDQRU DV ³OLNH D FRLOHG
VSULQJ´ &ODUN¶V FRXQVHO TXHVWLRQHG ZKHWKHU &ODUN ZDV
UHFHLYLQJ KLV PHGLFDWLRQ &ODUN KDG D NQRZQ KLVWRU\ RI
PHQWDOLOOQHVV
2Q-XO\DIHGHUDOJUDQGMXU\LQGLFWHG&ODUNRQ
RQH FRXQW RI EDQN UREEHU\ LQ YLRODWLRQ RI 86&
† D
,Q 1RYHPEHU RI 'U -RKQ *ULIILQ D SV\FKLDWULVW
UHWDLQHG IRU WKH GHIHQVH LQWHUYLHZHG &ODUN LQ WKH 8QLWHG
6WDWHV0DUVKDOV2IILFHIRUDSSUR[LPDWHO\RQHKRXU3ULRUWR
WKHLQWHUYLHZ'U*ULIILQUHYLHZHG&ODUN¶VPHGLFDOUHFRUGV
DQGLQIRUPDWLRQFRQFHUQLQJWKHUREEHU\'U*ULIILQZDVQRW
XQIDPLOLDU ZLWK &ODUN DV KH KDG LQWHUYLHZHG &ODUN VHYHQ
\HDUVHDUOLHULQFRQQHFWLRQZLWKDQRWKHUPDWWHU
%DVHGRQWKLV'U*ULIILQFRQFOXGHGWKDWDWWKHWLPHRIWKH
UREEHU\&ODUNZDVLPSDLUHGLQKLVDELOLW\WRIXOO\XQGHUVWDQG
ZKDWKHZDVGRLQJDQGVXEVWDQWLDOO\LPSDLUHGLQKLVDELOLW\WR
XQGHUVWDQGWKHFRQVHTXHQFHV'U*ULIILQRSLQHGWKDW&ODUN
ZDV D FKURQLF SDUDQRLG VFKL]RSKUHQLF DQG RI OLPLWHG
LQWHOOLJHQFH 'U *ULIILQ ZDV QRW DEOH WR FRQFOXGH ZLWK
FHUWDLQW\EXWEHOLHYHGWKDWLWZDVPRUHOLNHO\WKDQQRWWKDW
&ODUNZDVUHVSRQGLQJWRDXGLWRU\KDOOXFLQDWLRQVWHOOLQJKLPWR
UREWKHEDQN
&ODUNZDVWKHQVHQWWRWKH8QLWHG6WDWHV0HGLFDO&HQWHUIRU
)HGHUDO 3ULVRQHUV LQ 6SULQJILHOG 0LVVRXUL IRU HYDOXDWLRQ
:KLOH DW 6SULQJILHOG KH ZDV LQWHUYLHZHG VL[ WLPHV 'U
&ULVWLQD 3LHW] D IRUHQVLF SV\FKRORJLVW DVVLJQHG WR &ODUN¶V
FDVHIRXQG&ODUNILWWRVWDQGWULDO6KHIXUWKHUIRXQGWKDW
DOWKRXJK KH ZDV VXIIHULQJ IURP FKURQLF SDUDQRLG

-- 3 of 6 --

8QLWHG6WDWHVY&ODUN 1R
VFKL]RSKUHQLD &ODUN NQHZ ZKDW KH ZDV GRLQJ ZKHQ KH
UREEHGWKHEDQNDQGKHXQGHUVWRRGWKDWZKDWKHZDVGRLQJ
ZDV ZURQJ 6KH EDVHG KHU RSLQLRQ XSRQ WKH VHULHV RI
LQWHUYLHZV GRFXPHQWDWLRQ FRQFHUQLQJ &ODUN¶V SV\FKLDWULF
KLVWRU\ DQG WKH ZD\ LQ ZKLFK WKH UREEHU\ LWVHOI ZDV
FRQGXFWHG
$WWULDOWKHGHIHQGDQWRIIHUHGDQLQVDQLW\GHIHQVH7KHMXU\
KHDUG HYLGHQFH FRQFHUQLQJ WKH UREEHU\ DQG KHDUG WKH
SV\FKLDWULFH[SHUWV¶FRQIOLFWLQJWHVWLPRQ\FRQFHUQLQJ&ODUN¶V
VDQLW\DWWKHWLPHRIWKHFULPH'HIHQVHFRXQVHOGLGQRWPRYH
IRUMXGJPHQWRIDFTXLWWDODWWKHFORVHRIWKHHYLGHQFH2Q
$SULOWKHMXU\UHWXUQHGDYHUGLFWRIJXLOW\
2Q6HSWHPEHUWKHGLVWULFWFRXUWHQWHUHGMXGJPHQW
VHQWHQFLQJ&ODUNWRVHYHQW\HLJKWPRQWKV¶LPSULVRQPHQWDQG
DWKUHH\HDUWHUPRIVXSHUYLVHGUHOHDVH7KHFRXUWLPSRVHG
WKLVVHQWHQFHDIWHU ILQGLQJWKDW&ODUNKDGPDGHDWKUHDWRI
GHDWKGXULQJWKHFRPPLVVLRQRIWKHUREEHU\ZDUUDQWLQJD
OHYHO HQKDQFHPHQW †% E ) 7KLV WLPHO\ DSSHDO
IROORZHG
,,$1$/<6,6
$6XIILFLHQF\RIWKH(YLGHQFH
'HIHQVHFRXQVHO¶VIDLOXUHWRPRYHIRUMXGJPHQWRIDFTXLWWDO
FRQVWLWXWHG D ZDLYHU RI &ODUN¶V ULJKW WR FKDOOHQJH WKH
VXIILFLHQF\ RI WKH HYLGHQFH RQ DSSHDO 8QLWHG 6WDWHV Y
0RUURZ)G WK&LU HQEDQF FHUW
GHQLHG86 2XUUHYLHZLVWKHUHIRUH³OLPLWHG
WRGHWHUPLQLQJZKHWKHUWKHUHZDVDμPDQLIHVWPLVFDUULDJHRI
MXVWLFH¶>ZKLFK@ H[LVWV RQO\ LI WKH UHFRUG LV μGHYRLG RI
HYLGHQFHSRLQWLQJWRJXLOW¶´8QLWHG6WDWHVY3ULFH)G
WK&LU FLWDWLRQVRPLWWHG FHUWGHQLHG86

6HFWLRQ D VWDWHV LQ SHUWLQHQW SDUW WKDW DQ LQVDQLW\
GHIHQVH³LVDQDIILUPDWLYHGHIHQVHWRDSURVHFXWLRQXQGHUDQ\
)HGHUDOVWDWXWH´$GHIHQGDQWPXVWHVWDEOLVKWKDW³DWWKHWLPH
RIWKHFRPPLVVLRQRIWKHDFWVFRQVWLWXWLQJWKHRIIHQVHWKH
1R 8QLWHG6WDWHVY&ODUN
$V IRU WKH DSSOLFDWLRQ RI 866* † % E ) ,
EHOLHYH WKDW WKH DQDO\VLV LQ 8QLWHG 6WDWHV Y $OH[DQGHU
)G WK &LU LV PRUH FRPSHOOLQJ WKDQ WKH
PDMRULW\ DOORZV HYHQ WKRXJK WKH FXUUHQW YHUVLRQ RI WKLV
VHFWLRQ GRHV QRW UHTXLUH DQ H[SUHVV WKUHDW RI GHDWK ,Q
$OH[DQGHU ZH UHDG WKH SUHDPHQGPHQW † % E )
QDUURZO\FRQFOXGLQJ³WKDWWRVDWLVI\WKHTXDOLILHUμH[SUHVV¶
DGHIHQGDQW¶VVWDWHPHQWPXVWGLVWLQFWO\DQGGLUHFWO\LQGLFDWH
WKDWWKHGHIHQGDQWLQWHQGVWRNLOORURWKHUZLVHFDXVHWKHGHDWK
RIWKHYLFWLP´$OH[DQGHU)GDW,XQGHUVWDQGWKLV
KROGLQJWRKDYHWZRSDUWV)LUVWLWGHILQHVDQ³H[SUHVV´WKUHDW
RI GHDWK DV RQH WKDW LV PDGH ³GLVWLQFWO\ DQG GLUHFWO\´ ,G
6HFRQGLWVSHFLILHVWKDWDQH[SUHVV³WKUHDWRIGHDWK´LVRQH
WKDWLQGLFDWHVDGHIHQGDQW¶V³LQWHQ>W@WRNLOORURWKHUZLVHFDXVH
WKHGHDWKRIWKHYLFWLP´,G7KHUHIRUHWKHGHOHWLRQRIWKH
ZRUG ³H[SUHVV´ LQ DPHQGHG † % E ) LV QRW
GLVSRVLWLYH 8QGHU P\ XQGHUVWDQGLQJ RI $OH[DQGHU DQ
LQGLVWLQFWRULQGLUHFWVWDWHPHQWWKDWLQGLFDWHVVRPHWKLQJOHVV
GHDGO\WKDQDQLQWHQWWRNLOORUWRFDXVHWKHYLFWLP¶VGHDWK
ZRXOGQRWEHD³WKUHDWRIGHDWK´IRU SXUSRVHVRIDPHQGHG
†% E )
7KLVSRVLWLRQILQGVVXSSRUWLQWKH6HQWHQFLQJ*XLGHOLQHV
FRPPHQWDU\ %HIRUH WKH DPHQGPHQW WR † % E )
DSSOLFDWLRQQRWHUHDGDVIROORZV
$Q ³H[SUHVV WKUHDW RI GHDWK´ DV XVHG LQ VXEVHFWLRQ
E ) PD\ EH LQ WKH IRUP RI DQ RUDO RU ZULWWHQ
VWDWHPHQW DFW JHVWXUH RU FRPELQDWLRQ WKHUHRI )RU
H[DPSOHDQRUDORUZULWWHQGHPDQGXVLQJZRUGVVXFKDV
³*LYHPHWKHPRQH\RU,ZLOONLOO\RX´³*LYHPHWKH
PRQH\RU,ZLOOSXOOWKHSLQRQWKHJUHQDGH,KDYHLQP\
SRFNHW´³*LYHPHWKHPRQH\RU,ZLOOVKRRW\RX´³*LYH
PH\RXUPRQH\RUHOVH ZKHUHWKHGHIHQGDQWGUDZVKLV
KDQGDFURVVKLVWKURDWLQDVODVKLQJPRWLRQ ´RU³*LYH
PH WKH PRQH\ RU \RX DUH GHDG´ ZRXOG FRQVWLWXWH DQ
H[SUHVVWKUHDWRIGHDWK7KHFRXUWVKRXOGFRQVLGHUWKDW
WKHLQWHQWRIWKHXQGHUO\LQJSURYLVLRQLVWRSURYLGHDQ
LQFUHDVHGRIIHQVHOHYHOIRUFDVHVLQZKLFKWKHRIIHQGHU V
HQJDJHG LQ FRQGXFW WKDW ZRXOG LQVWLOO LQ D UHDVRQDEOH

-- 4 of 6 --

8QLWHG6WDWHVY&ODUN 1R
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
&21&855,1*,13$57',66(17,1*,13$57
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
.$5(11(/6210225(&LUFXLW-XGJHFRQFXUULQJLQ
SDUW DQG GLVVHQWLQJ LQ SDUW , FRQFXU LQ 3DUW ,,$ RI WKH
PDMRULW\ RSLQLRQ EXW , ZULWH VHSDUDWHO\ WR FOHDU XS DQ\
FRQIXVLRQWKDWPD\DULVHIURPRXUSUHYLRXVGLVFXVVLRQVRIWKH
LQVDQLW\GHIHQVHLQIHGHUDOSURVHFXWLRQV%HFDXVH,EHOLHYH
WKDWDGHIHQGDQWPXVWWKUHDWHQPRUHWKDQKDUPWRZDUUDQWWKH
DSSOLFDWLRQRIDWZROHYHOHQKDQFHPHQWXQGHUDPHQGHG86
6HQWHQFLQJ*XLGHOLQHV0DQXDO ³866*´ †% E )
,UHVSHFWIXOO\GLVVHQWIURP3DUW,,%
$V QRWHG LQ WKH PDMRULW\ RSLQLRQ ZH KDYH FOHDUO\
UHFRJQL]HGWKDW86&†SODFHVWKHEXUGHQRISURYLQJ
DQLQVDQLW\GHIHQVHRQWKHGHIHQGDQW6HH8QLWHG6WDWHVY
.LPHV)G Q WK&LU FHUWGHQLHG
6&W 8QLWHG6WDWHVY'DYLV)G
Q WK&LU 'HIHQGDQWVKDYHERUQHWKLVEXUGHQ
VLQFH ZKHQ &RQJUHVV HQDFWHG WKH ,QVDQLW\ 'HIHQVH
5HIRUP$FW86&††LQUHVSRQVHWRWKH
DFTXLWWDORQDOOFKDUJHVRI-RKQ+LQFNOH\IRUKLVDWWHPSWHG
PXUGHURI3UHVLGHQW5RQDOG5HDJDQ6HH6KDQQRQY8QLWHG
6WDWHV 86 ,Q 8QLWHG 6WDWHV Y
6HDUDQ )G WK &LU KRZHYHU WKH SDQHO
HUURQHRXVO\UHOLHGRQ'DYLVY8QLWHG6WDWHV86
LQKROGLQJWKDW³>L@QIHGHUDOODZWKHJRYHUQPHQWEHDUV
WKHEXUGHQRISURYLQJVDQLW\DIWHUWKHGHIHQGDQWDIILUPDWLYHO\
DVVHUWVDQLQVDQLW\GHIHQVH´6HDUDQ)GDW6HDUDQ
WKXVRYHUORRNHGQRWRQO\WKHVWDWXWHLWVHOIEXWDOVR6KDQQRQ
DQGWKH6L[WK&LUFXLWSUHFHGHQWVRI'DYLVDQG.LPHVZKLFK
DV SULRU GHFLVLRQV ZHUH FRQWUROOLQJ DXWKRULW\ 6HH 8QLWHG
6WDWHVY+XPSKUH\)G WK&LU ,
WKHUHIRUH FRQFXU ZLWK WKH PDMRULW\ DERXW WKH DSSURSULDWH
DSSOLFDWLRQ RI † DQG HPSKDVL]H WKDW 6HDUDQ KDV QR
SUHFHGHQWLDOYDOXHRQWKLVLVVXH
1R 8QLWHG6WDWHVY&ODUN
GHIHQGDQWDVDUHVXOWRIDVHYHUHPHQWDOGLVHDVHRUGHIHFWZDV
XQDEOH WR DSSUHFLDWH WKH QDWXUH DQG TXDOLW\ RU WKH
ZURQJIXOQHVVRIKLVDFWV´,G
7KH8QLWHG6WDWHVKDVWKHEXUGHQRISURYLQJHYHU\HOHPHQW
RIWKHRIIHQVHEH\RQGDUHDVRQDEOHGRXEW,QUH:LQVKLS
86 +RZHYHUWKHGHIHQGDQWKHUHSUHVHQWHGD
GHIHQVHRIGLPLQLVKHGUHVSRQVLELOLW\DQGWKXVERUHWKHEXUGHQ
RI SURYLQJ LQVDQLW\ E\ FOHDU DQG FRQYLQFLQJ HYLGHQFH
86&† E 8QLWHG6WDWHVY.LPHV)G WK&LU
FLWLQJ86&† D DQG E FHUWGHQLHG
6&W GLVWLQJXLVKLQJWZRGLIIHUHQWW\SHVRIPHQWDO
GLVHDVH RU GHIHFW ³GLPLQLVKHG UHVSRQVLELOLW\´ ZKHUH
GHIHQGDQW¶VLQVDQLW\DEVROYHVKLPRIFULPLQDOUHVSRQVLELOLW\
DQG³GLPLQLVKHGFDSDFLW\´ZKHUHWKHPHQWDOFRQGLWLRQLVVXFK
WKDWWKHGHIHQGDQWFDQQRWIRUPWKHFXOSDEOHPHQWDOVWDWH
7KH SV\FKLDWULF H[SHUWV DJUHHG WKDW &ODUN VXIIHUHG IURP
FKURQLF SDUDQRLG VFKL]RSKUHQLD EXW WKHLU RSLQLRQV ZHUH
GLDPHWULFDOO\RSSRVHGZLWKUHVSHFWWRWKHTXHVWLRQRIZKHWKHU
WKLV PHQWDO GLVHDVH RU GHIHFW UHQGHUHG KLP XQDEOH WR
DSSUHFLDWHWKHQDWXUHDQGTXDOLW\RUWKHZURQJIXOQHVVRIKLV
DFWV
7KHFRQFOXVLRQUHDFKHGE\'U3LHW]WKDW&ODUNZDVQRW
LQVDQHDWWLPHRIWKHFRPPLVVLRQRIWKHFULPHZDVJURXQGHG
RQDWKRURXJKHYDOXDWLRQRYHUDQH[WHQGHGSHULRGRIWLPHDW
6SULQJILHOG'U3LHW]FRQVLGHUHGWKDW&ODUNKDGEHHQWDNLQJ
DQWLSV\FKRWLFPHGLFDWLRQWKDWKHKDGH[KLELWHGQRV\PSWRPV
RISV\FKRVLVDWWKHWLPHRIWKHUREEHU\RUDZHHNODWHUZKHQ
LQWHUYLHZHG $OWKRXJK &ODUN UHYHDOHG WKDW KH KDG KHDUG
YRLFHVWHOOLQJKLPWRUREWKHEDQNKHDOVRWROG'U3LHW]WKDW
KHZDVXVXDOO\DEOHWRLJQRUHVXFKDXGLWRU\KDOOXFLQDWLRQV
&ODUN¶VUHSRUWHGO\FDOPEHKDYLRUDQGVHHPLQJO\ZHOOWKRXJKW
RXW SODQ DW WKH WLPH RI WKH FULPH ZDV FRQWUDVWHG ZLWK KLV
³IORULGO\ SV\FKRWLF´ EHKDYLRU DW WLPHV LQ WKH SDVW ZKHQ KH
ZDVQRWWDNLQJKLVPHGLFDWLRQ
:HILQGQRPLVFDUULDJHRIMXVWLFHLQWKHMXU\¶VFKRLFHWR
FUHGLWWKHRSLQLRQRI'U3LHW]RYHUWKDWRI'U*ULIILQLQWKLV
FDVH7KHMXU\FRXOGSURSHUO\DFFHSWWKHWHVWLPRQ\RIRQH

-- 5 of 6 --

8QLWHG6WDWHVY&ODUN 1R
7KH FRPPHQWDU\ QRZ VWDWHV WKDW ³WKH GHIHQGDQW GRHV QRW KDYH WR
VWDWH H[SUHVVO\ KLV LQWHQW WR NLOO WKH YLFWLP LQ RUGHU IRU WKH HQKDQFHPHQW WR
DSSO\´ 866* † % &RPPHQWDU\ Q
H[SHUWDQGUHMHFWWKDWRIWKHRWKHU8QLWHG6WDWHVY6KHSDUG
)G WK &LU :H WKHUHIRUH DIILUP
&ODUN¶VFRQYLFWLRQ
%6HQWHQFLQJ*XLGHOLQHV$SSOLFDWLRQ
$W VHQWHQFLQJ WKH GLVWULFW FRXUW DSSOLHG D WZR OHYHO
HQKDQFHPHQWXQGHU866*†% E ) ILQGLQJWKDW
&ODUNPDGHDWKUHDWRIGHDWKGXULQJWKHFRPPLVVLRQRIWKH
UREEHU\7KHGLVWULFWFRXUWVWDWHGWKDW³WKHODQJXDJHμ,KDYH
DJXQGRZKDW,VD\QRERG\ZLOOJHWKXUW¶LVDWKUHDWWKDWD
UHDVRQDEOHSHUVRQZRXOGFRQVLGHUSXWWLQJRQHLQGDQJHURI
GHDWK´&ODUNFKDOOHQJHVWKLVDSSOLFDWLRQRIWKHHQKDQFHPHQW
FRQWHQGLQJWKDWWKHQRWHGRHVQRWFRQVWLWXWHDWKUHDWRIGHDWK
&ODUNUHOLHVRQ8QLWHG6WDWHVY$OH[DQGHU)G WK
&LU LQ ZKLFK D SDQHO RI WKLV FRXUW KHOG WKDW D QRWH
FRQWDLQLQJWKHODQJXDJH³,¶YHJRWDERPELQP\FDVHDQG,¶YH
JRW D JXQ´ GLG QRW TXDOLI\ IRU HQKDQFHPHQW XQGHU
†% E )
7KDW FDVH ZDV GHFLGHG XQGHU D IRUPHU YHUVLRQ RI WKH
*XLGHOLQHKRZHYHUZKLFKSURYLGHGIRUDWZROHYHOLQFUHDVH
IRUPDNLQJDQH[SUHVVWKUHDWRIGHDWK7KH$OH[DQGHUFRXUW
KHOG WKDW IRU WKH HQKDQFHPHQW WR DSSO\ ³D GHIHQGDQW¶V
VWDWHPHQW PXVW GLVWLQFWO\ DQG GLUHFWO\ LQGLFDWH WKDW WKH
GHIHQGDQWLQWHQGVWRNLOORURWKHUZLVHFDXVHWKHGHDWKRIWKH
YLFWLP´$OH[DQGHU)GDW
7KH6HQWHQFLQJ&RPPLVVLRQGHOHWHGWKHZRUG³H[SUHVV´
IURPWKHJXLGHOLQHLQWKXVUHPRYLQJWKHXQGHUSLQQLQJ
RI$OH[DQGHU&ODUN¶VVHQWHQFLQJLQZDVEDVHGRQWKH
SRVW JXLGHOLQH LQ ZKLFK WKH GHDWK WKUHDW QHHG QRW EH
³H[SUHVV´IRUWKHHQKDQFHPHQWWRDSSO\
1R 8QLWHG6WDWHVY&ODUN
([DPSOHVRIWKUHDWVRIGHDWKDUHVHWRXWLQWKH&RPPHQWDU\
$SSOLFDWLRQ1RWH
)RUH[DPSOHDQRUDORUZULWWHQGHPDQGXVLQJZRUGVVXFK
DV³*LYHPHWKHPRQH\RU,ZLOONLOO\RX´³*LYHPHWKH
PRQH\RU,ZLOOSXOOWKHSLQRQWKHJUHQDGH,KDYHLQP\
SRFNHW´³*LYHPHWKHPRQH\RU,ZLOOVKRRW\RX´³*LYH
PHWKHPRQH\RUHOVH ZKHUHWKHGHIHQGDQWGUDZVKLV
KDQGDFURVVKLVWKURDWLQDVODVKLQJPRWLRQ ´³*LYHPH
WKHPRQH\RU\RXDUHGHDG´ZRXOGFRQVWLWXWHDWKUHDWRI
GHDWK7KHFRXUWVKRXOGFRQVLGHUWKDWWKHLQWHQWRIWKLV
SURYLVLRQ LV WR SURYLGH DQ LQFUHDVHG RIIHQVH OHYHO IRU
FDVHVLQZKLFKWKHRIIHQGHU V HQJDJHGLQFRQGXFWWKDW
ZRXOGLQVWLOOLQDUHDVRQDEOHSHUVRQZKRLVDYLFWLPRI
WKHRIIHQVHDIHDURIGHDWK
2XUWDVNWKHQLVWRGHWHUPLQHZKHWKHUDQRWHVWDWLQJ³,
KDYHDJXQ'RZKDW\RXDUHWROGDQG\RXZRQW >VLF@JHW
KXUW´XQDFFRPSDQLHGE\DQ\JHVWXUHVRUGLVSOD\RIDZHDSRQ
ZRXOGLQVWLOOLQDUHDVRQDEOHSHUVRQDIHDURIGHDWK:HGR
QRWGLVDJUHHZLWKWKHGLVWULFWFRXUW¶VFRQFOXVLRQWKDWLWZRXOG
5HDGLQJ WKH WZR SKUDVHV RI WKH QRWH WRJHWKHU WKH FOHDU
LPSOLFDWLRQRIWKHPHVVDJHLVWKDWIDLOXUHWRFRRSHUDWHZRXOG
UHVXOW LQ EHLQJ VKRW WKHQ DQG WKHUH E\ D JXQ 7KLV ZRXOG
LQVWLOOLQDQ\UHDVRQDEOHSHUVRQVXFKDVWKHWHOOHULQWKLVFDVH
DIHDURIGHDWK7KHGLVWULFWFRXUWGLGQRWHUULQDSSO\LQJWKH
HQKDQFHPHQWXQGHU†% E )
&ODUN¶VFRQYLFWLRQDQGVHQWHQFHDUHWKHUHIRUH$)),50('

-- 6 of 6 --